Florida law does not require every vehicle to be insured with every type of insurance coverage available. In fact, private passenger automobiles generally require only two types of insurance coverage to be legally registered in the State of Florida: 1) Property Damage Liability (PD); and 2) Personal Injury Protection (PIP). Unfortunately, insurance agents frequently advise their clients that they have purchased "Full Coverage," which usually really means the client has purchased the basic insurance required under Florida law.
Property Damage (PD): F.S. 324.022 requires a registered private passenger automobile to have $10,000 of coverage available for payment of damage to the property of others (not the vehicle with the policy) resulting from any one crash. This will also cover towing, storage, and rental car costs. As many newer vehicles have a value far greater than $10,000, this amount might not even fully compensate a claimant for the total loss of one vehicle.
If your automobile or motorcycle was damaged in an accident, which was not your fault, the at-fault party's insurance company may be responsible for paying for the cost of the repair of your vehicle or for payment of the fair market value of your vehicle if it was a 'total loss.'
Florida law (F.S. 319.30) defines a 'total loss' as an insured vehicle that the insurance company pays the owner to replace with one of 'like kind and quality.' Alternatively, many insurance companies, for the purpose of determining whether to repair or replace a vehicle, define a vehicle as a 'total loss' when the cost of repairing the vehicle is more than 80% of the cost of replacing the vehicle.
Personal Injury Protection (PIP): Commonly referred to as Florida's "No-Fault" insurance, this coverage is supposed to pay for the insured person's own medical bills (and sometimes lost wages) regardless of who was at fault for causing the accident.
Collision: This coverage pays for the damage to the insured vehicle, regardless of whom was at fault for the accident. It is not required under the law; however, if the vehicle has a loan against it (like people usually get to purchase the vehicle), the loan company may require this coverage to be purchased as a condition for making the loan. Generally, this coverage will pay a maximum amount equal to the fair market price of the vehicle before the collision. In other words, if the vehicle is not worth the amount of the outstanding loan, you may still be responsible for paying the difference to the loan company if the vehicle is a total loss.
Rental Reimbursement: This coverage is optional and will pay for the rental of a vehicle while your vehicle is being repaired. This coverage will generally pay for up to 30 days of rental expenses, but usually it is also limited to the reasonable time required to repair the vehicle, whichever is less. This coverage will apply regardless of whom is at fault for causing the accident.
Medical Payments (MedPay): This is an optional coverage, which will pay medical expenses incurred by the insured up to the stated limit, regardless of fault for the accident. Generally, this coverage may also include a right of subrogation or reimbursement.
Bodily Injury Liability (BI): This coverage provides payment for damages that the insured party causes to the body of others, up to the stated policy limits. These damages may include medical expenses (past & future), lost wages, loss of earning capacity, and non-economic damages (e.g., pain/suffering, mental anguish, inconvenience, etc.).
Uninsured Motorist (UM)/Underinsured Motorist (UIM): This coverage provides payment to the insured party for damages caused to an insured party by an person without BI coverage or with insufficient BI coverage. Under this coverage, the insured party’s own insurance company ‘stands in the shoes’ of the at-fault driver of an uninsured or underinsured automobile. In this instance, your own insurance company has an adversarial relationship to you.
Excess/Umbrella: Often people may choose to have another insurance policy, which will provide additional, higher limits to their liability policies. These policies pay after the underlying limits have been exhausted through a settlement or judgement.
Collateral Sources: Any payments made to the claimant, or made on the claimant’s behalf, through health insurance and/or medical payments (auto) insurance are considered ‘collateral sources.’ Generally, the entity that pays the ‘collateral source’ funds may be entitled to be reimbursed the amount it paid from any settlement the claimant may receive from a third party, i.e., the ‘at-fault party.’
Subrogation and/or Right of Reimbursement: Some types of collateral sources (such as health insurance), which are paid as a requirement of a contract, contain provisions that they shall be reimbursed from a claimants settlement funds or grant a right of ‘subrogation’ to the company that made the payments. An entity that has a right of subrogation may sue the ‘at-fault’ third party directly to recover the money it has paid in benefits. Those collateral sources may also be entitled to a lien against any settlement the claimant may receive from the ‘at-fault’ third party.
Collateral sources and their respective rights of subrogation or reimbursement may have a significant effect on the amount a claimant is able to keep from his or her settlement. In some cases, the collateral sources (e.g., Medicare & Medicaid) may be entitled to reimbursement in an amount determined by a statutory formula calculated by the government. Some types of health insurance (ERISA-type policies) may grant the entity the right to receive 100% of their funds back from the settlement, regardless of whether the claimant will receive anything from the remainder. Private health insurance may generally be reduced by a pro-rate share of the claimant’s attorney’s fees.